Natural Gas Technical Analysis and Near-Term Outlook
The near-term outlook for natural gas has shifted back to being firmly bearish. Yesterday’s move up proved to be another pullback to challenge the neckline of the complex head and shoulders. Also, natural gas settled below the crucial $2.28 objective and fell toward another important target at $2.22 after the settlement.
The $2.22 target is the 50 percent retracement of the rise from $1.700 and a confluent wave projection. There is also a target at $2.19 that has increased in importance during the past few days. This area between $2.19 and $2.22 may prove to be a stalling point. Even so, any move up from this area will most likely prove to be a short-lived correction and is expected to hold $2.31.
Now that natural gas has taken out the $2.28 equal to (1.00) target the primary wave down from $2.743, the decline is poised to extend to the $2.15 intermediate (1.382) target and then the $2.10 larger than (1.618) target. The $2.10 target is crucial and is the most likely stalling point for the decline from $2.743 because this is also the 62 percent retracement of the move up from $1.700 and the complex head and shoulders’ target.
The 50-day moving average held on a closing basis today, but prices have already moved below that level after the settlement. Otherwise, there are no signals or patterns that call for the move down to end. As stated earlier, resistance at $2.31 is expected to hold and $2.35 is key for the near-term. Settling above $2.35 will call for another attempt at $2.43 and higher.
This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.
